Question 1

At a relative commodity price above equilibrium

Accepted Answer

A) the excess demand for a commodity exceeds the excess supply of the commodity 
B) the quantity demanded of imports exceeds the quantity supplied of exports 
C) the world price of the commodity will fall 
D) the excess demand for the commodity will increase. 
A) the excess demand for a commodity exceeds the excess supply of the commodity 
B) the quantity demanded of imports exceeds the quantity supplied of exports 
C) the world price of the commodity will fall 
D) the excess demand for the commodity will increase. C

Question 2

Export prices must rise for a nation to increase its exports because the nation:

Accepted Answer

A) incurs increasing opportunity costs in export production 
B) faces decreasing opportunity costs in producing import substitutes 
C) faces decreasing marginal rate of substitution in consumption 
D) all of the above 
A) incurs increasing opportunity costs in export production 
B) faces decreasing opportunity costs in producing import substitutes 
C) faces decreasing marginal rate of substitution in consumption 
D) all of the above D

Question 3

Which of the following statements regarding partial equilibrium analysis is false?

Accepted Answer

A) It relies on traditional demand and supply curves 
B) It studies a single market. 
C) it can be used to determine the equilibrium relative commodity price but not the equilibrium quantity with trade. 
D) It can be used to show changes in prices when demand or supply changes in another country. 
A) It relies on traditional demand and supply curves 
B) It studies a single market. 
C) it can be used to determine the equilibrium relative commodity price but not the equilibrium quantity with trade. 
D) It can be used to show changes in prices when demand or supply changes in another country. C

Question 4

If the terms of trade of a nation are 1.5 in a two-nation world,those of the trade partner are:

Accepted Answer

A) 3/4 
B) 2/3 
C) 3/2 
D) 4/3 
A) 3/4 
B) 2/3 
C) 3/2 
D) 4/3

Question 5

Using a graph of offer curves,for each of the following,identify the effect of the change listed on the relative price of good X and on exports of good X by Nation 1.
a.The supply of Y increases in Nation 2.
b.The demand for X decreases in Nation 1.

Accepted Answer

a.Nation 2's offer curve shifts towards

Question 6

If the nation's taste for its import commodity increases:

Accepted Answer

A) the nation's terms of trade remain unchanged. 
B) the nation's terms of trade deteriorate. 
C) the partner's terms of trade deteriorate. 
D) the partner's terms of trade improve. 
A) the nation's terms of trade remain unchanged. 
B) the nation's terms of trade deteriorate. 
C) the partner's terms of trade deteriorate. 
D) the partner's terms of trade improve.

Question 7

Draw a figure showing: (1)in Panel A a nation's demand and supply curve for A traded commodity and the nation's excess supply of the commodity(2)in Panel C the trade partner's demand and supply curve for the same traded commodity and its excess demand for the commodity,and (3)in Panel B the supply and demand for the quantity traded of the commodity,its equilibrium price,and why a price above or below the equilibrium price will not persist.At any other price,QD ≠ QS,and P will change to P₂.

Accepted Answer

See Figure 2.
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The equilibrium relativ

Question 8

If a nation does not affect world prices by its trading,its offer curve:

Accepted Answer

A) is a straight line 
B) bulges toward the axis measuring the import commodity 
C) intersects the straight-line segment of the world's offer curve 
D) intersects the positively-sloped portion of the world's offer curve 
A) is a straight line 
B) bulges toward the axis measuring the import commodity 
C) intersects the straight-line segment of the world's offer curve 
D) intersects the positively-sloped portion of the world's offer curve

Question 9

Suppose nation 1 is an importer of good X.In a general equilibrium framework,an increase in the demand for good Y will

Accepted Answer

A) decreased the price of good X and increase the volume of imports of good X 
B) decreased the price of good X and decrease the volume of imports of good X 
C) increase the price of good X and increase the volume of imports of good X 
D) increase the price of good X and decrease the volume of imports of good X 
A) decreased the price of good X and increase the volume of imports of good X 
B) decreased the price of good X and decrease the volume of imports of good X 
C) increase the price of good X and increase the volume of imports of good X 
D) increase the price of good X and decrease the volume of imports of good X

Question 10

The index of relative U.S.export prices fell during the first few years of the 21ˢᵗ century.The primary cause of this was

Accepted Answer

A) the growing U.S.trade deficit 
B) the rising price of commodities,such as oil 
C) the persistent appreciation of the U.S.dollar 
D) the introduction of the Euro as a major world currency 
A) the growing U.S.trade deficit 
B) the rising price of commodities,such as oil 
C) the persistent appreciation of the U.S.dollar 
D) the introduction of the Euro as a major world currency

Question 11

If the nation's tastes for its import commodity increases:

Accepted Answer

A) the nation's offer curve rotates toward the axis measuring its import commodity 
B) the partner's offer curve rotates toward the axis measuring its import commodity 
C) the partner's offer curve rotates toward the axis measuring its export commodity 
D) the nation's offer curve rotates toward the axis measuring its export commodity 
A) the nation's offer curve rotates toward the axis measuring its import commodity 
B) the partner's offer curve rotates toward the axis measuring its import commodity 
C) the partner's offer curve rotates toward the axis measuring its export commodity 
D) the nation's offer curve rotates toward the axis measuring its export commodity

Question 12

Suppose the terms of trade for nation X rises from 100 to 110.Explain how this will impact the terms of trade for nation Y.

Accepted Answer

Nation Y's terms of trade are

Question 13

If the terms of trade increase in a two-nation world,those of the trade partner:

Accepted Answer

A) deteriorate 
B) improve 
C) remain unchanged 
D) any of the above 
A) deteriorate 
B) improve 
C) remain unchanged 
D) any of the above

Question 14

Explain the effect of changes in petroleum prices on the terms of trade and relative export prices for the United States in recent years.

Accepted Answer

In recent years the nominal price of pet

Question 15

The offer curve of a nation curves toward the axis measuring the nation's

Accepted Answer

A) import commodity 
B) export commodity 
C) export or import commodity 
D) nontraded commodity 
A) import commodity 
B) export commodity 
C) export or import commodity 
D) nontraded commodity

Question 16

If the tastes for a nation import commodity increases,trade volume:

Accepted Answer

A) increases 
B) declines 
C) remains unchanged 
D) cannot be determined. 
A) increases 
B) declines 
C) remains unchanged 
D) cannot be determined.

Question 17

If a nation's terms of trade improve,the nation's social welfare

Accepted Answer

A) will deteriorate. 
B) will improve. 
C) will remain unchanged. 
D) might improve,deteriorate,or remain unchanged. 
A) will deteriorate. 
B) will improve. 
C) will remain unchanged. 
D) might improve,deteriorate,or remain unchanged.

Question 18

Carefully explain the importance of the terms of trade to a nation.Your answer should include an explanation of how changes in the terms of trade are likely to impact social welfare.

Accepted Answer

Answers will vary,but should include (1)

Question 19

Using a graph of offer curves,for each of the following,identify the effect of the change listed on the relative price of good Y and on exports of good Y by Nation 2.
a.The demand for X increases in Nation 2.
b.The supply of Y increases in Nation 2.

Accepted Answer

a.Nation 2's offer curve shifts towards

Question 20

Which of the following statements regarding general equilibrium analysis is not true?

Accepted Answer

A) The demand and supply curve are derived from the nation's production frontier and indifference map 
B) It shows the same basic information as offer curves 
C) It shows the same equilibrium relative commodity prices as with offer curves 
D) It shows the same equilibrium relative commodity prices as partial equilibrium analysis. 
A) The demand and supply curve are derived from the nation's production frontier and indifference map 
B) It shows the same basic information as offer curves 
C) It shows the same equilibrium relative commodity prices as with offer curves 
D) It shows the same equilibrium relative commodity prices as partial equilibrium analysis.

At a relative commodity price above equilibrium

Export prices must rise for a nation to increase its exports because the nation:

Which of the following statements regarding partial equilibrium analysis is false?

If the terms of trade of a nation are 1.5 in a two-nation world,those of the trade partner are:

Using a graph of offer curves,for each of the following,identify the effect of the change listed on the relative price of good X and on exports of good X by Nation 1. a.The supply of Y increases in Nation 2. b.The demand for X decreases in Nation 1.

If the nation's taste for its import commodity increases:

If a nation does not affect world prices by its trading,its offer curve:

Suppose nation 1 is an importer of good X.In a general equilibrium framework,an increase in the demand for good Y will

The index of relative U.S.export prices fell during the first few years of the 21ˢᵗ century.The primary cause of this was

If the nation's tastes for its import commodity increases:

Suppose the terms of trade for nation X rises from 100 to 110.Explain how this will impact the terms of trade for nation Y.

If the terms of trade increase in a two-nation world,those of the trade partner:

Explain the effect of changes in petroleum prices on the terms of trade and relative export prices for the United States in recent years.

The offer curve of a nation curves toward the axis measuring the nation's

If the tastes for a nation import commodity increases,trade volume:

If a nation's terms of trade improve,the nation's social welfare

Carefully explain the importance of the terms of trade to a nation.Your answer should include an explanation of how changes in the terms of trade are likely to impact social welfare.

Using a graph of offer curves,for each of the following,identify the effect of the change listed on the relative price of good Y and on exports of good Y by Nation 2. a.The demand for X increases in Nation 2. b.The supply of Y increases in Nation 2.

Which of the following statements regarding general equilibrium analysis is not true?

Introduction

The Law of Comparative Advantage

The Standard Theory of International Trade

Factor Endowments and the Heckscher-Ohlin Theory

Economies of Scale, imperfect Competition, and International Trade

Economic Growth and International Trade

Economic Growth and International Trade

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange

The Income Adjustment Mechanism and Synthesis of Automatic

Open-Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past,present,and Future

Filters

Exam 4: Demand and Supply, offer Curves, and the Terms of Trade

At a relative commodity price above equilibrium

Export prices must rise for a nation to increase its exports because the nation:

Which of the following statements regarding partial equilibrium analysis is false?

If the terms of trade of a nation are 1.5 in a two-nation world,those of the trade partner are:

Using a graph of offer curves,for each of the following,identify the effect of the change listed on the relative price of good X and on exports of good X by Nation 1. a.The supply of Y increases in Nation 2. b.The demand for X decreases in Nation 1.

If the nation's taste for its import commodity increases:

If a nation does not affect world prices by its trading,its offer curve:

Suppose nation 1 is an importer of good X.In a general equilibrium framework,an increase in the demand for good Y will

The index of relative U.S.export prices fell during the first few years of the 21ˢᵗ century.The primary cause of this was

If the nation's tastes for its import commodity increases:

Suppose the terms of trade for nation X rises from 100 to 110.Explain how this will impact the terms of trade for nation Y.

If the terms of trade increase in a two-nation world,those of the trade partner:

Explain the effect of changes in petroleum prices on the terms of trade and relative export prices for the United States in recent years.

The offer curve of a nation curves toward the axis measuring the nation's

If the tastes for a nation import commodity increases,trade volume:

If a nation's terms of trade improve,the nation's social welfare

Carefully explain the importance of the terms of trade to a nation.Your answer should include an explanation of how changes in the terms of trade are likely to impact social welfare.

Using a graph of offer curves,for each of the following,identify the effect of the change listed on the relative price of good Y and on exports of good Y by Nation 2. a.The demand for X increases in Nation 2. b.The supply of Y increases in Nation 2.

Which of the following statements regarding general equilibrium analysis is not true?

Introduction

The Law of Comparative Advantage

The Standard Theory of International Trade

Factor Endowments and the Heckscher-Ohlin Theory

Economies of Scale, imperfect Competition, and International Trade

Economic Growth and International Trade

Economic Growth and International Trade

Nontariff Trade Barriers and the New Protectionism

Economic Integration: Customs Unions and Free Trade Areas

International Trade and Economic Development

International Resource Movements and Multinational Corporations

Balance of Payments

Foreign Exchange Markets and Exchange Rates

Exchange Rate Determination

The Price Adjustment Mechanism With Flexible and Fixed Exchange

The Income Adjustment Mechanism and Synthesis of Automatic

Open-Economy Macroeconomics: Adjustment Policies

Prices and Output in an Open Economy: Aggregate Demand and Aggregate Supply

Flexible Versus Fixed Exchange Rates, the European Monetary System, and Macroeconomic Policy Coordination

The International Monetary System: Past,present,and Future

Filters